Luna Foundation Guard Loans Out BTC and UST to Curb Volatility

Luna Foundation Guard

Luna Foundation Guard has announced that it will loan $750 worth of BTC and a similar amount of UST to trading firms to control volatilities in the stablecoin.

Terra Labs co-founder Do Kwon says that the move is not exiting the position but boosting the liquidity around the UST peg. The executive adds that LFG will accumulate more BTC as the stablecoin grows.

The UST lost its dollar peg over the weekend, dropping to $0.987 before recovering to $1, while LUNA tokens tanked about 10% in the same period.

The deviation from the dollar peg seen in the UST was attributed to large quantities of the UST that were redeemed from Curve, while $192 million of UST were disposed of.

TerraUSD uses another token, LUNA, to maintain the dollar price with an on-chain mint and burn mechanism, and is one of the largest algorithmic stablecoin.

Source: Twitter

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